sb -
A lot of what you say is true, but I have trouble with some of the conclusions. Rather than repeat things I've posted in another context, I'll just paste the urls and allow you to pick apart anything you may have the time and the desire to.
Message 14664977
"...In a economic world with hard money, the normal condition is deflation as a continuing increase in unit productivity drives down prices. This would not be any kind of problem absent the extreme levels of government intervention in the labor markets. Between minimum wage laws and the use of government force and the selective non-enforcement of laws to benefit unions in exchange for political support, the flexibility of the labor markets is severely damaged and they cannot easily adapt to changing conditions. This means that instead of moderate short term wage reductions, severe unemployment results as the labor market moves from a market price regime to a price controlled regime...."
Message 14650236
"...Any half way decent free market economy is almost always increasing unit productivity. From my POV, it is the erroneous conclusions that are drawn from the productivity numbers that are the most serious danger, not all the bogus methods that go into cooking the numbers.
As productivity improves, it is competition that determines where the benefits go. The benefits are always a mix of increased profits, increased wages, and lower product prices. All of these are components of an increased standard of living, but stock valuations can only be supported if a significant part of the benefits flow to profits. Profits are always temporary and require that competitive barriers exist and persist. As I noted elsewhere, it is probably true that the actual increase in productivity numbers is due more to the extinction of the lower productivity competitive losers, than it is to the higher absolute productivity of the survivors, who are faced with lower output prices and higher wages...."
Message 14643216
"...it is commonly thought that the primary effect of technology is to increase productivity by acting as a productivity multiplier for individual workers. While this effect is real, it is offset to a smaller or larger degree by competition as the prices for production output are driven lower to reflect the lower costs. It is far more likely that the effect on overall measured productivity is primarily due increased competitive stress as the introduction of new technology is often less a source of improvements for an individual company than a new cost of business survival. Only technology that can be combined with a competitive advantage and financial strength, and denied to competitors, can be an unalloyed blessing.
In a technology driven environment, it is the suppliers of the new technology that are the primary beneficiaries, not the buyers. However, this benefit is limited in both time and extent by the ability of the buyers to both invest and survive. The technology suppliers are in a similar position to arms suppliers to a couple of neighboring countries at war. Their success often contains the seeds of their own destruction, if they are not able to find new markets."
Message 14650945
"...As an aside to the productivity issue, not involving either technology or individual output per hour, there is what I call Vertical Disintegration...."
Not included in the above is the fact that unemployment is not normally a significant factor in a truly free market economy (should one ever exist). The combination of minimum wage laws, government-subsidized union coercion, and unemployment insurance are the primary causes of other than short term unemployment in a sufficiently large economy.
Regards, Don |
